Matthew Bryza, January 18, 2016
The United States has important national interests at stake in the Eastern Mediterranean. This is the region where the U.S.’ two most serious national security threats converge – ISIS and a revanchist Russia. It is also where two of Washington’s most important allies, Turkey and Israel, once enjoyed a strategic partnership, which may now be rising again after collapsing 5 years ago. Additionally, while four decades of political conflict in Cyprus have aggravated tensions between NATO members Greece and Turkey and obstructed military cooperation between NATO and the EU, Cyprus settlement talks may be approaching a breakthrough. Finally, two of the world’s largest natural gas discoveries in the past 15 years are located in the Eastern Mediterranean: the Leviathan field in Israel and the Zohr field in Egypt.
While many observers worry that Turkey’s shooting down of the Russian air force fighter on November 24 threatens to engulf the region in a war between Russia and NATO, in reality, Russia’s response has been restrained. Moscow’s sanctions against Ankara have been relatively mild, while President Putin has never termed Turkey’s action an “act of war,” calling it, instead, a “stab in the back” and a “hostile action.” Futher, despite crude language accusing Ankara of doing Washington’s bidding, President Putin received U.S. Secretary of State Kerry on December 15 in search of cooperation on Syria issues.
President Putin knows his case against Turkey is weak. Ankara repeatedly warned Moscow to stop its violations against both Turkish airspace and its bombing of ethnic Turkomen in northern Syria. The Russian President realizes he cannot object too much to Ankara’s claimed right to protect these ethnic Turks who found themselves on the Syrian side of the border after the Ottoman Empire collapsed, lest he risk undermining his own justification for invading eastern Ukraine and annexing Crimea, namely, to protect Ukraine’s Russian minority.
Thus, Mr. Putin’s crude belligerence has done nothing to advance Russia’s strategic interests. On the contrary, his actions have cleared the way for a Russian strategic defeat and the normalization of relations between Turkey and Israel. Ankara and Tel Aviv now recognize they share a strategic interest in helping Turkey reduce its energy dependence on a potentially unreliable Russia by buying Israeli natural gas. They are, therefore, eyeing a potential pipeline connecting Israel’s Leviathan field with Turkey’s growing gas market, which would translate diplomatic commitments into tangible economic and strategic benefits for both countries. Furthermore, an Israel-Turkey gas pipeline could also enable Cyprus to export its future natural gas production to Turkey’s lucrative market, which, in turn, could help cement a comprehensive settlement regarding the Cyprus Question.
The combination of Israel-Turkey rapprochement and a comprehensive Cyprus settlement would create powerful new strategic vectors in the Eastern Mediterranean that would strengthen the cohesion of an extended Euro-Atlantic community stretching from the United States to the Levant. This would undermine President Putin’s reckless attempts to weaken transatlantic solidarity since invading Ukraine in February 2014 through overt military operations, hybrid warfare, and harassment of NATO airspace.
Washington is keenly interested in helping its critical ally, Israel, bolster its national security by using natural gas exports to improve relations with many of its Muslim-majority neighbors. Thanks in part to strong but quiet U.S. encouragement, Israel will likely export a portion of the Leviathan field’s gas to Jordan, with modest volumes also delivered to Israel’s Palestinian population. However, to ensure the development of the giant Leviathan field is commercially viable, significantly more gas must be exported than Jordan’s market can bear.
Egypt provides another option. Cooperation between Israel and Egypt has been a cornerstone of U.S. policy in the Middle East since the historic Camp David accords of 1979, and remains crucially important today, given all three countries’ shared interest in countering ISIS and the Muslim Brotherhood. At first glance, Egypt’s underutilized natural gas export terminals seem to offer a commercially attractive way to export Leviathan gas to European and global markets. In reality, however, the economics may not be so attractive. To finance exports of Leviathan gas to Egypt’s LNG terminals, banks may require terminal operators (e.g., British Gas and/or Royal Dutch Shell) to sign long-term take-or-pay contracts, which the operators may be unwilling to sign.
Turkey, on the other hand, provides a more attractive export market for Israeli natural gas. Turkey has the largest and fastest growing gas market and the most creditworthy buyers in the Eastern Mediterranean. Unlike in Egypt, a consortium of creditworthy Turkish companies with European partners are prepared to put in place all necessary contractual commitments to secure the financing of natural gas production and export projects.
Thus, a natural gas pipeline from Israel to Turkey makes commercial sense; it would also be highly attractive to Washington for geopolitical reasons, given the U.S.’ desire to see its two friends in the Eastern Mediterranean restore their strategic partnership. Until recently, political animosity between Ankara and Tel Aviv had blocked progress on an Israel-Turkey pipeline. But, at the time of writing in mid-December, Turkey and Israel seemed on the verge of a breakthrough in their bilateral relations, catalyzed both by Russia’s antagonism of Turkey and by recognition of the commercial and strategic benefits of an Israel-Turkey natural gas pipeline.
Cyprus poses both a challenge and an opportunity to such a project. An Israel-Turkey pipeline would need to cross the Exclusive Economic Zone of Cyprus. Though international law, specifically the UN Convention on the Law of the Sea, is ambiguous on whether Cyprus could legally block such a pipeline, Cypriot permission would likely be required by banks to finance such a project. On the other hand, if a breakthrough can be reached in negotiations on the comprehensive settlement of the Cyprus Question, the Cypriot government will likely welcome an Israel-Turkey pipeline and its prospect of incorporating significant volumes of Cypriot gas, which are expected to be discovered in the near future, for export to Turkey.
It should therefore be clear that conspiracy theories assuming control of hydrocarbon resources is what drives U.S. foreign policy are incorrect. Eastern Mediterranean natural gas will have little direct impact on U.S. energy security. No major U.S. oil companies have shown interest in developing natural gas prospects in Israel, Cyprus, or Egypt. Indeed, the only U.S. commercial entity in the game is Noble, a mid-sized company that is a world-class driller but not an oil major experienced in exploration and production.
Rather, Washington views recent discoveries of natural gas in the Eastern Mediterranean as relevant to key U.S. geopolitical interests, namely, strengthening Israel’s relations with Turkey (as well as Egypt), and catalyzing a Cyprus settlement. An Israel-Turkey pipeline, which could incorporate future gas exports from Cyprus as well as Egypt’s mammoth Zohr field, could be marketed not only in Turkey, but perhaps also in the EU via the Southern Corridor, thereby linking the U.S.’ key Middle Eastern region, the Caspian, and European friends and allies.
*Turkish version of this op-ed was firstly published at Analist monthly journal's January 2016 issue.
Ambassador (ret.) Matthew Bryza Non Resident Senior Fellow The Atlantic Council of the United States and Board Member of Turcas
SOURCE
While many observers worry that Turkey’s shooting down of the Russian air force fighter on November 24 threatens to engulf the region in a war between Russia and NATO, in reality, Russia’s response has been restrained. Moscow’s sanctions against Ankara have been relatively mild, while President Putin has never termed Turkey’s action an “act of war,” calling it, instead, a “stab in the back” and a “hostile action.” Futher, despite crude language accusing Ankara of doing Washington’s bidding, President Putin received U.S. Secretary of State Kerry on December 15 in search of cooperation on Syria issues.
President Putin knows his case against Turkey is weak. Ankara repeatedly warned Moscow to stop its violations against both Turkish airspace and its bombing of ethnic Turkomen in northern Syria. The Russian President realizes he cannot object too much to Ankara’s claimed right to protect these ethnic Turks who found themselves on the Syrian side of the border after the Ottoman Empire collapsed, lest he risk undermining his own justification for invading eastern Ukraine and annexing Crimea, namely, to protect Ukraine’s Russian minority.
Thus, Mr. Putin’s crude belligerence has done nothing to advance Russia’s strategic interests. On the contrary, his actions have cleared the way for a Russian strategic defeat and the normalization of relations between Turkey and Israel. Ankara and Tel Aviv now recognize they share a strategic interest in helping Turkey reduce its energy dependence on a potentially unreliable Russia by buying Israeli natural gas. They are, therefore, eyeing a potential pipeline connecting Israel’s Leviathan field with Turkey’s growing gas market, which would translate diplomatic commitments into tangible economic and strategic benefits for both countries. Furthermore, an Israel-Turkey gas pipeline could also enable Cyprus to export its future natural gas production to Turkey’s lucrative market, which, in turn, could help cement a comprehensive settlement regarding the Cyprus Question.
The combination of Israel-Turkey rapprochement and a comprehensive Cyprus settlement would create powerful new strategic vectors in the Eastern Mediterranean that would strengthen the cohesion of an extended Euro-Atlantic community stretching from the United States to the Levant. This would undermine President Putin’s reckless attempts to weaken transatlantic solidarity since invading Ukraine in February 2014 through overt military operations, hybrid warfare, and harassment of NATO airspace.
Washington is keenly interested in helping its critical ally, Israel, bolster its national security by using natural gas exports to improve relations with many of its Muslim-majority neighbors. Thanks in part to strong but quiet U.S. encouragement, Israel will likely export a portion of the Leviathan field’s gas to Jordan, with modest volumes also delivered to Israel’s Palestinian population. However, to ensure the development of the giant Leviathan field is commercially viable, significantly more gas must be exported than Jordan’s market can bear.
Egypt provides another option. Cooperation between Israel and Egypt has been a cornerstone of U.S. policy in the Middle East since the historic Camp David accords of 1979, and remains crucially important today, given all three countries’ shared interest in countering ISIS and the Muslim Brotherhood. At first glance, Egypt’s underutilized natural gas export terminals seem to offer a commercially attractive way to export Leviathan gas to European and global markets. In reality, however, the economics may not be so attractive. To finance exports of Leviathan gas to Egypt’s LNG terminals, banks may require terminal operators (e.g., British Gas and/or Royal Dutch Shell) to sign long-term take-or-pay contracts, which the operators may be unwilling to sign.
Turkey, on the other hand, provides a more attractive export market for Israeli natural gas. Turkey has the largest and fastest growing gas market and the most creditworthy buyers in the Eastern Mediterranean. Unlike in Egypt, a consortium of creditworthy Turkish companies with European partners are prepared to put in place all necessary contractual commitments to secure the financing of natural gas production and export projects.
Thus, a natural gas pipeline from Israel to Turkey makes commercial sense; it would also be highly attractive to Washington for geopolitical reasons, given the U.S.’ desire to see its two friends in the Eastern Mediterranean restore their strategic partnership. Until recently, political animosity between Ankara and Tel Aviv had blocked progress on an Israel-Turkey pipeline. But, at the time of writing in mid-December, Turkey and Israel seemed on the verge of a breakthrough in their bilateral relations, catalyzed both by Russia’s antagonism of Turkey and by recognition of the commercial and strategic benefits of an Israel-Turkey natural gas pipeline.
Cyprus poses both a challenge and an opportunity to such a project. An Israel-Turkey pipeline would need to cross the Exclusive Economic Zone of Cyprus. Though international law, specifically the UN Convention on the Law of the Sea, is ambiguous on whether Cyprus could legally block such a pipeline, Cypriot permission would likely be required by banks to finance such a project. On the other hand, if a breakthrough can be reached in negotiations on the comprehensive settlement of the Cyprus Question, the Cypriot government will likely welcome an Israel-Turkey pipeline and its prospect of incorporating significant volumes of Cypriot gas, which are expected to be discovered in the near future, for export to Turkey.
It should therefore be clear that conspiracy theories assuming control of hydrocarbon resources is what drives U.S. foreign policy are incorrect. Eastern Mediterranean natural gas will have little direct impact on U.S. energy security. No major U.S. oil companies have shown interest in developing natural gas prospects in Israel, Cyprus, or Egypt. Indeed, the only U.S. commercial entity in the game is Noble, a mid-sized company that is a world-class driller but not an oil major experienced in exploration and production.
Rather, Washington views recent discoveries of natural gas in the Eastern Mediterranean as relevant to key U.S. geopolitical interests, namely, strengthening Israel’s relations with Turkey (as well as Egypt), and catalyzing a Cyprus settlement. An Israel-Turkey pipeline, which could incorporate future gas exports from Cyprus as well as Egypt’s mammoth Zohr field, could be marketed not only in Turkey, but perhaps also in the EU via the Southern Corridor, thereby linking the U.S.’ key Middle Eastern region, the Caspian, and European friends and allies.
*Turkish version of this op-ed was firstly published at Analist monthly journal's January 2016 issue.
Ambassador (ret.) Matthew Bryza Non Resident Senior Fellow The Atlantic Council of the United States and Board Member of Turcas
SOURCE
